July 07, 2006	Friday	Jumadi-ul-Sani 10, 1427

NEW DELHI, July 6: India put on hold on Thursday privatisation moves after a coalition partner threatened to pull out of the government and communist allies voiced strong opposition.

“There have been representations from some of the (coalition) constituents and allies about the process of disinvestment in some public sector enterprises,” a spokesman for Prime Minister Manmohan Singh said.

“Taking into account their concerns, the prime minister has decided to keep all disinvestment decisions and proposals on hold pending further review,” spokesman Sanjaya Baru said in a statement.

Analysts called the decision a blow to India's liberalisation drive and said it highlighted the divergent coalition's problems in implementing reforms.

The regional DMK party had threatened to withdraw from the government unless it scrapped plans to sell a 10 per cent stake in mining and power generation firm Neyveli Lignite based in its home state of Tamil Nadu.

The withdrawal by the DMK, which has 16 MPs in parliament, would have left the Congress-led coalition without a majority even with outside support from its communist allies.

The government announced last week plans for the sales of 10 per cent stakes in Neyveli Lignite and India's second largest aluminum-maker, National Aluminium Co. Ltd, prompting some 20,000 Neyveli employees to go on strike this week in protest.

The communists, who prop up the minority coalition in parliament, had also strongly opposed the sales and announced week-long protests from next Thursday.

The government has not revealed how much revenue the stake sales would generate but media reports said it would be about $555 million.

The money would be used to help fund poverty-reduction programmes, the government has said.

The left-leaning Congress government sharply scaled back the previous Bharatiya Janata Party administration's privatisation plans after its upset win in 2004. But earlier this year, it identified 10 to 15 profit-making state firms as candidates for stake sales.

There was no immediate reaction from the DMK to the government's announcement which came soon after party leaders met with Singh.

The communists welcomed the government's move but they said they were holding out for it to scrap its plans altogether to sell stakes in all profitable state-owned firms.—AFP